Central Bank of India chief S Sridhar today said the industry’s non-performing assets (NPAs) are likely to increase, as some smaller companies that borrowed during the low rates regime would find it difficult to service their loans due to the hike in rates.

“Some increase in NPAs cannot be ruled out in my view, across the industry,” the Chairman and Managing Director said, adding that different banks would adopt different strategies to deal with the problem.

The stress will emanate from smaller accounts, which “are not able to bear the increased cost of funding” and are constrained because of a “lower access” to money as compared to the past, he said.

Sridhar pointed out that the stress can be traced back to the years of global slowdown after September, 2008, when the government announced a stimulus that resulted in high liquidity and low rates.

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0 responses to “Banks' NPAs may rise due to rate hikes- Central Bank of India”

  1. dattatreyahg says:

    The general public should get to know the meaning of non-performing assets and write-off of loan amounts and one-time settlements –terms used by banks. It is
    the public money that gets lost in the activities involving these terms.The least that banks should do is to publish prominently in newspapers the names of company/establishment/entities and also the names of promoters/chairman/directors of such companies and the amounts involved. This will help the public to know where not to put their money.

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